Hollywood takes heart from miners’ win

Buoyed by the success of the mining lobby in bending government policy over its proposed resource super profits tax, other industries are stepping up efforts to record similar victories.

Among those inspired by the miners are the film and television industries, which want the federal government to protect them from internet piracy. The widespread problem is expected to be exacerbated by the national broadband network, which will make it easier and quicker for consumers to make illegal copies of films.

The debate was also given greater urgency on Sunday when
Telstra
halved the cost of its high-end broadband plan, which means up to 200 movies can be copied for less than $90 per month. Other internet service providers are expected to introduce cheaper and more competitive plans this week in response to Telstra’s move. The film and TV industries employ about 50,000 people across Australia, according to Access Economics. A study carried out by LEK Consulting in 2005 estimated that piracy cost the film industry more than $230 million a year.

Pressure is mounting on the government to tackle the growing problem after negotiations between content producers and ISPs ground to a halt earlier this year in the wake of the copyright industry’s failed attempt to convince the Federal Court that Perth-based ISP iiNet was legally culpable for piracy on its networks.

The Australian Federation Against Copyright Theft (AFACT) heads back to the Federal Court on August 2 to appeal against the ruling that found
iiNet
had not authorised customers to infringe copyright by downloading movies and television shows illegally using file-sharing software.

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The Media Entertainment and Arts Alliance, Screen Actors Guild and the Australian Performing Rights Association lodged an application to join the case against iiNet as amicus curiae, or friends of the court, yesterday. The application will be considered at the end of appeal proceedings.

In a local case with a worldwide audience, Federal Court judge Dennis Cowdroy found in the ISP’s favour on February 4. His judgement noted that iiNet had no control over the file-sharing software used to create copies of films and had done no more than provide an internet service.

He also said iiNet would have been protected by so-called “safe harbour" provisions, which would limit damages liability had it been found to have authorised copyright infringement.

The decision soothed the nerves of ISPs across Australia and left the content industries back at square one. Holding Redlich managing partner Ian Robertson, a leading media and entertainment lawyer, said the ongoing legal dispute went to the heart of the economics of a very significant industry.

“Where some people cry wolf and claim something will be the end of the known world, like the mining industry with a new tax, in truth the participants in the audio-visual industries have got a valid point," he said. “Audio-visual production is a very expensive, high-risk activity. If they can’t be protected from flagrant piracy, there’s going to be great difficulty for that industry."

Discussions between the internet and content industries had struggled to make any progress before the case went to court but, following the emphatic nature of iiNet’s initial victory, they have fizzled out completely.

“We basically reached an impasse. The effect of the decision has been to provide the certainty that we said was going to be necessary so that the industry could understand where its responsibilities begin and end," Internet Industry Association chief executive Peter Coroneos said.

AFACT has appealed against the decision on behalf of 34 applicants including some of Hollywood’s biggest movie studios and the Seven Network. AFACT and its members remain upbeat about the chances of winning the appeal but they are lobbying furiously for the government to step in.

“The legal framework really has to address the issue of copyright theft because it is growing all the time.

“The government recognises this is a very serious issue for the creative industry in the digital age, particularly in the lead-up to the national broadband network. We are very confident that it is not going to support a situation where flagrant copyright infringement is going to go unaddressed."

The office of Communications Minister
Stephen Conroy
said the government was aware of calls by copyright industries for a “three strikes" or graduated response scheme. This would require ISPs to reduce internet access speeds, suspend or even terminate the accounts of repeat offenders after issuing a series of escalated warnings.

The minister’s spokesman said the government’s preference was that discussions between all interested parties took place to establish mutually beneficial rules governing the digital economy.

The Attorney-General’s Department is monitoring recent international developments, including countries that have an existing legislative approach. Should industry not reach a consensus on how to deal with this issue, a spokesman said it would consider stepping in.

Frustrated by the complexities, expense and public relations implications of pursuing individuals for illegally downloading content, copyright holders have turned their attentions to ISPs. They claim most people would stop breaching copyright if they received a warning letter from their ISP.

But ISPs are reluctant to get involved because it would be expensive to install the technology and monitor network behaviour. They are also concerned about the impact it would have on customer relations.

The internet industry’s preferred solution is for content producers to embrace online business models. Mr Coroneos pointed to radio station, Pandora in the United States, as an example. Songs are streamed over the internet, ISPs classify it as unmetered content so that it doesn’t chew through monthly download allocations and listeners have the option to buy songs they like through Apple’s iTunes. Hulu is operating a similar model for movies and television shows.

Mr Robertson said a negotiated outcome between copyright holders and ISPs was unlikely because they had different commercial imperatives.

“I don’t know that ISPs are philosophically opposed to taking action against flagrant copyright infringement by their customers, but it’s going to cost them money and therefore they don’t want to do it," he said.

If iiNet is ultimately successful in defending itself against the allegations of authorising copyright infringement, it will add weight to content producers’ claims that current legislation is not protecting their business.

A major government concern would be upsetting the Australian public after proposed three-strikes legislation in the UK sparked a huge row. After almost two years of debate, the Digital Economy Bill was controversially passed into UK law in April.

Initially this will require ISPs to send letters to customers advising that their account has been used to download content in breach of copyright, but the telecommunications watchdog will then advise government on whether to mandate reduced internet access speeds, account suspensions or terminations.

France has passed three-strikes legislation allowing a newly created agency to cut the internet access of repeat infringers for up to a year, hand out fines of up to €300,000 ($433,000) and impose two-year jail terms.

Civil libertarians warn legislation like that in the United Kingdom and France would make libraries, schools and other community hubs liable for copyright breaches on their networks. They have also questioned whether interfering with an individual’s right to communicate is a reasonable response to a civil offence, but Ian Robertson said this was a weak argument.

“I’m not aware of any other aspect of our society where people who flagrantly breach the law are allowed to do so with impunity because it’s an infringement of their civil liberties to stop them," he said. “We simply don’t regulate society in that way.

“Ultimately, people’s internet accounts will have to be at risk. I don’t have any trouble with that provided the system is scalable, so that you don’t lose your account instantly, and there are appropriate appeal and review mechanisms. Those sorts of safeguards can be provided."